Buy-to-let landlords hit as rents fall by 20%

Rents are falling by 20 per cent across London as landlords are forced to slash prices because of over-supply.

Thousands of people who hoped to ride out the credit crunch with lucrative buy-to-let investments are being hit.

Rents have been growing for a year but estate agents today said owners from Kensington to Canary Wharf are now cutting prices by hundreds of pounds. The owner of a house in Chelsea which was let last year for £2,700 a week is now taking offers for more than £2,000 according to Knight Frank. Tim Hyatt of Knight Frank said: "We have noticed a huge increase in stock in the last three to four months, while inquiries have increased only marginally."

Houses and flats by the Thames that were being let for up to £1,500 a week this time last year are going for £1,200.

Experts blamed a glut in the number of flats being advertised as owners decide to rent instead of sell in a falling market. Savills said some rents had fallen by 10 per cent while Knight Frank said the drop was five per cent to 20 per cent in prime London areas.

The Royal Institution of Chartered Surveyors said new landlord instructions, indicating a rise in rentals, rose by almost a third in the first three months of the year.